Triple Strategy - Oldie, But Goodie
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Over the weekend, I was cleaning out a drawer and came across a UIT flyer from 1997, describing the “Triple Strategy” from Equity Securities Trust. It described 3 strategies to “beat the DJIA”. Based on the flyer’s hypo, the combined strategies had beaten the DJIA 15 out of 22 years - (1975-1996), returning 23.65%/yr versus the DJIA’s 15.88%/ yr. The 3 strategies, whose results are refreshed annually, are:
- (Top Ten) Top ten highest yielding stocks in the DJIA. - (Focus Five) Five lowest priced of the ten highest yielding stocks in the DJIA. - (Penultimate Pick) Second lowest priced stock of the Focus Five. When I get some time, I'll come back with the numbers (1997-2007), just to see how it did. DISCLAIMER: For those FA's possessing a low IQ, the abovementioned strategies are posted for fun. It is not mentioned for the purpose of recommending any investment strategy. So, if you do something stupid and recommend these strategies to your client and it blows-up, don't blame me. Blame yo' mama for drinkin' and smokin' crack when she was preggies wit you. Word...[quote=doberman] Over the weekend, I was cleaning out a drawer and came across a UIT flyer from 1997, describing the “Triple Strategy” from Equity Securities Trust. It described 3 strategies to “beat the DJIA”. Based on the flyer’s hypo, the combined strategies had beaten the DJIA 15 out of 22 years - (1975-1996), returning 23.65%/yr versus the DJIA’s 15.88%/ yr. The 3 strategies, whose results are refreshed annually, are:
- (Top Ten) Top ten highest yielding stocks in the DJIA.
- (Focus Five) Five lowest priced of the ten highest yielding stocks in the DJIA.
- (Penultimate Pick) Second lowest priced stock of the Focus Five.
When I get some time, I’ll come back with the numbers (1997-2007), just to see how it did.
DISCLAIMER: For those FA’s possessing a low IQ, the abovementioned strategies are posted for fun. It is not mentioned for the purpose of recommending any investment strategy. So, if you do something stupid and recommend these strategies to your client and it blows-up, don’t blame me. Blame yo’ mama for drinkin’ and smokin’ crack when she was preggies wit you. Word…
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I used a similar strategy during that time. I was buying people Putnam funds.
[quote=joedabrkr]
[/quote] Agreed, but you have to look at this flyer in the context of the "go-go internet craze" era. Back then, any stock and/or strategy with a return of 20+%/ year wasn't good enough. It's funny, that there's no way FINRA would approve this flyer, given today's regulatory climate. Just keeping it on my desk makes me nervous, as FINRA could pop-in anytime, consider it contraband, and have "Dano" book me. (For those old enough to remember or those awake at 2:00AM watching reruns, "Dano" refers to the tv series "Hawaii Five-0".) I tried looking-up historical returns of the "Penultimate Pick", but couldn't find any references to it.
Ok, just spend over an hour hashing this out. Be aware I did a lot of cutting and pasting. There is bound to be an error or ten. The website I used is www.dogsofthedow.com <?: prefix = o ns = "urn:schemas-microsoft-com:office:office" />
These guys call the focus five Small Dogs of the Dow. It appears the triple strategy did not in fact achieve it's goals over this time horizon. Avg annual return 3.45 vs 7.85 on the Dow. I didn't annualize it or total return it. I'll leave that to anyone else who wishes to waste more time on it.
Be aware this does not appear to include dividends. Also says the prices were adjusted for splits during the year in question. Therefore that may have caused an actual different Penultimate in certain years. Not sure how to track that one down without going crazy on it. I claim no accuracy to any of these number they were all taken from this website and sometimes even seemed to contradict on different pages. It should give you an idea though.
Oh and the Penultimate was actually the Penworstofemall
1997 Dogs 17.3 Small Dogs 14.8 Penultimate 41.4 AVG 24.50 DJIA 22.6 Difference 1.90 1998 Dogs 7.8 Small Dogs 9.4 Penultimate 18.2 AVG 11.80 DJIA 16.1 Difference -4.30 1999 Dogs 1.1 Small Dogs -7.5 Penultimate -44.4 AVG -16.93 DJIA 25.2 Difference -42.13 2000 Dogs 2.7 Small Dogs 7.1 Penultimate 0.5 AVG 3.43 DJIA -6.2 Difference 9.63 2001 Dogs -7.8 Small Dogs -6.3 Penultimate -1.1 AVG -5.07 DJIA -7.1 Difference 2.03 2002 Dogs -12.2 Small Dogs -14 Penultimate -34 AVG -20.07 DJIA -14.8 Difference -5.27 2003 Dogs 23.6 Small Dogs 18.7 Penultimate 46.15 AVG 29.48 DJIA 25.3 Difference 4.18 2004 Dogs 0.5 Small Dogs 8.4 Penultimate -1.2 AVG 2.57 DJIA 3.1 Difference -0.53 2005 Dogs -8.9 Small Dogs -4.3 Penultimate -13.3 AVG -8.83 DJIA -0.6 Difference -8.23 2006 Dogs 24.8 Small Dogs 35.2 Penultimate 11.1 AVG 23.70 DJIA 16.3 Difference 7.40 2007 Dogs -1.4 Small Dogs 0.4 Penultimate -19 AVG -6.67 DJIA 6.4 Difference -13.07 Avg Annual 4.32 5.63 0.40 3.45 7.85 -4.40Penultimates were according to adjusted prices
1997 AT&T 41.4%
1998 Phillip Morris 18.2%
1999 Goodyear (44.4%)2000 Caterpillar .5%
2001 International paper (1.1%)
2002 JP Morgan (34.0%)
2003 Tie Honeywell and JP Morgan 39.3% and 53% Average 46.15%
(They tied for first and second, next was GE 27.2%)
2004 SBC (1.2%)
2005 Pfizer (13.3%)
2006 Pfizer 11.1
2007 GM (19%)
One follow up to note as I looked over the info after posting. The strategy got Killed in 1999. If you pull out that one year the avgs are very close, less than .5 off from each other.
Goodyear was the biggest factor although all three sucked that year.
Question:
What if the exact same strategy was followed starting every year on February 1st instead of January 1st? Answer: The results could be very different.[quote=anonymous] Question:
Answer:
The results could be very different.[/quote]
Question: What if you travelled to work using the exact same route you take every day, but left 3 minutes later than normal?
Answer: ???